Neoliberalism has been found wanting – at least by the 99% and a growing army of economists – so what is to take its place? Marx says something other than capitalism. David Sainsbury, a former minster in the Labour government, and Geoff Mulgan, Tony Blair's director of policy, disagree. Each outlines a "new" capitalism with its sharper teeth blunted, avarice expunged, fairness and social justice imprinted on its soul and innovation and entrepreneurship providing the rocket fuel. So what's not to like?

The authors' twin and sometimes overlapping theories are rich in detail, fleshed out by the practical experience both men have had in a range of fields, including thinktanks, enterprise, government and innovation. However, much of what they describe could become the property of a recharged Labour party, an energised Lib-Dem revival or a Conservative party not nearly so wedded to the notion that a state reduced to its smallest dimensions is the main aim of government. Neither author directly tackles the key issue of redistribution and what is to be done about the bottom 25% who are rapidly being pushed further and further into the wings as the grand performance of economic revival takes centre stage. In the Mulgan-Sainsbury new world, ideology is absent or, at least, it's a creed that, as yet, has no name.

Lord Sainsbury refers to "progressive capitalism" and the "enabling state". This is not the "command and control" role advocated by traditional socialists. Nor is it the size of government that counts. What's needed, he argues, is a government that can uphold the (undefined) "public interest" that has been allowed to atrophy for 30 years.

What Lord Sainsbury rightly calls for is a more efficient civil service, regulations and codes of conduct that effectively govern commercial relationships and individuals; greater support for innovation, including the encouragement of inter-related industries in clusters that ought, for instance, to recharge regions left moribund over the past several decades – and an education system that fosters vocational and Stem subjects (science, technology, engineering and maths). His reminder of how much harm the neoliberal approach has caused is eye-watering as the jaws of inequality opened wide.

From 1960 to 1980, the world's per capita income grew by 3.1%, but by only 2% in the period 1980 to 2000 when deregulation was supposed to "free" the market to spur on the wealth creators. In the US, between 1979 and 2005, the top 0.1% (300,000 people) received more than 20% of all after-tax income gains, while the bottom 60% – 180 million – received only 13.5%. As economist Joseph Stiglitz and others have pointed out, in the US, the capitalist offer is bust: "ordinary" wages have flatlined for 30 years, while prices have risen, including the escalating cost of education, the poor person's key to a better life.

Geoff Mulgan argues that capitalism's strength has been its ability to adapt, colonise and regenerate. The rapacious predator locusts in his book's title, from time to time, have had to give way to the creator busy bees, supposedly symbolic of the best side of capitalism. He advocates the "relational state". "We are witnessing the emergence of an economy founded more on relationships than on commodities," he writes. "On doing rather than having; on maintenance rather than production." Multiple currencies that include money, friendship and love and not just cash are a generous utopian concept and obviously a far better goal than "greed is good". But is it a match for the corrupt power of materialism?

Mulgan is my former boss, but that doesn't stop me from saying that what he writes is always rewarding because he intellectually coaxes you into believing – however fleetingly – that a rotten system doesn't have to be this way. Capitalism can be made the servant, not the master. At the same time, he entertains via the element always present in his work of Ripley's Believe it or Not!. For instance, in The Locust and the Bee, he reports on one study in which addressed envelopes were left in neighbourhood streets. More were delivered to the right door when people believed themselves to be receiving many sources of social support, as part of a reciprocal society. And the decline in fertility rates took 130 years in the UK (1800-1930) but only 20 years in South Korea (1965-85).

Mulgan is a curator of human ingenuity. The future for capitalism, he believes, lies in healthcare, education and green industries. Entrepreneurship – finding new solutions to sometimes familiar problems by combining unexpected ingredients (eg the housebound, lunches and cars to create meals on wheels) – demands more imaginative investment. Mulgan says the capitalist system is alive and in motion. Buy these books if you want to ponder on at least a couple of the directions it has yet to travel.

Both authors will be speaking at the Bristol Festival of Ideas, run in association with the Observer. Geoff Mulgan will be appearing at the Watershed on Friday 10 May at 7.45pm and Lord Sainsbury will be talking at St George's Bristol on Thursday 16 May at 6.15pm